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tv   Market Makers  Bloomberg  February 21, 2014 10:00am-12:01pm EST

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of momentum, but not materially in the sense that it will affect assets rises in the way that you would have a selloff on the back of. >> thank you so much for joining us. we will be back "on the markets" in 30 minutes. "market makers" up next. >> live from bloomberg headquarters in new york, this is "market makers," with erik schatzker and stephanie ruhle. >> boomer bust. breaking news. he second delay -- will existing home sales slump for the fifth straight month. the numbers and what they mean. >> and "house of cards"? bill ackman promises to take his herbalife issue to the end of the earth. a company's meeting with regulators might shake out. quite cover girl. tellsodel petra nemcova us how they pick who will grace the cover of the cover the "sports illustrated" swimsuit
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cover. i am matt miller. >> and i am alix steel. existing home sales, why can you ?ell us to g >> they are down five point one percent. the expectation was 4.1%, so it did take a big toll. it is very obvious what happened during the month when you look --the regional background breakdown. 7% almost in the midwest, down 5% in the south, 8.3% in the west, everywhere affected, 80% of the country was affected in january by the bad weather. single-family down 5.8%. condos and co-ops were flat, may be eager to get around in the with condos cities and co-ops.
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overall, a bad month. everybody will look through it and we will wait and see what happens when the weather starts to move up. >> we will keep you with us, mike. we will bring with us drew matus, deputy economist at ubs, given stamford, connecticut this morning. drew, this is the lowest annual 2008.ince obviously the weather is rough. >> i don't think it should be a concern. what would give me concerned and aart thinking is that we saw pickup in layoffs. we have not seen those yet, so as long as initial claims they were they are at, i think the general trend in the economy holds, and that is the trend that was in place before we had the winner -- the winter that will not end. >> and drew, what kind of paybacks can we expect in the spring months? >> things like construction and some of the other indicators that paid out -- that payback is less certain. will you buy a new spring wardrobe when it is mid april or
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will you live with what you had last year? that is probably more questionable. for the broad themes that ubs has, for example pent up demand leads increased housing sales, new car sales, things like that, those are the purchasers will take place, but no one is going to go out and get their hair cut twice because they cannot go to the barber shop last week. >> a definitely not. >> i get it caught a lot. -- cut a lot. can impactly weather the economy long term, what have you seen on that? termt is not have a long- impact. it followed to the category of natural disasters. as drew said, you will not go back and have the valentine's day dinner you did not get because of the snow. but if you are going to buy a car or a house, you are probably going to do that still. the question is -- how long does it take for people to get back into the market or four things to snap back? so you have a little bit of a loss, but you will see the
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economy recover. it does not look like it is having a real effect on competence -- on confidence. that is the key thing. we are not the layoffs or consumer confidence fall. people are hanging in there. everybody is waiting for the groundhog to go away. >> we can agree, drew, weather has been an issue. still there is that tight credit. what can those factors due to impact the market? >> obviously tight credit and rising rates are not good but i will say this -- i think one of the things we forget is that rising rates will encourage banks to lend and maybe those lending standards will ease up a little because you can actually charge more, you can get compensated for the risk you are taking. i think that part of the equation is often lost. it is good if you have 3% mortgage rates, but only two people in america can get one. >> i got 1, 3 .25%. >> it is harder to have one widely available to everybody. >> i heard you talking about this with trish earlier, mike.
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i would think that rising interest rates or the threat thereof would encourage people on the fence to go out and locked down house purchases. >> it is a bit of a psychological issue. we assume that when you take the weather out, as reports that interest rates are rising, hit the media, then people tend to go out and buy. is at to point out, this 30-year mortgage rate. we are down here. mortgage rates may have risen a little, but mortgage rates are not really going up. they are not high at this point. they are low by historical standards, and it is going to keep people able to finance homes. the request and everybody always asks is not what is a house cost what is my monthly organs payment? -- monthly mortgage payment? they are not going up that much. >> i was thinking earlier, we will talk about fannie and freddie later on, about the housing market. it needs to stay at this level, right? because we still have loans out there that are not exactly superhigh quality, and a drop
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would be painful for those companies, for those at gse's at least. are the prices looking stable to you? i know we are still 35% of the peak, but the peak was insane in 2006. >> i think prices are looking more stable, particularly if you look at the employment trends. they are clearly skewing toward a 35-year-olds to 40-year-olds. these are people who want to move out of their parents' basement, get married, and have kids. they want to buy a house. as long as we do not see a super spike in mortgage rates, i think most people will move and that's direction or alternatively go rent and then they will have to buy a lot of things to furnish their apartment. so there is good news coming, and it is coming because we are beginning to see the pickup in employment in the areas we want to see them in. >> we can only hope their girlfriends have the kind of credit quality that alix steel has. >> 3.25%, ma'am, i know. you are weeping. >> that is impressive.
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good call. drew matus, thank you so much, jeopardy chief u.s. economist at ubs and of course mike mckee, our own chief economist. we take you now to the other side of the world. in the ukraine, there is a deal to end the week of deadly violence in the apple city of kiev. the president and opposition leaders have agreed to hold early elections will stop at a few minutes ago, the ukraine parliament voted unanimously to amend the prosecution back to the 2004 standards. bloomberg correspondent is our man on the ground there. tell us first what this means, what do these concessions mean as far as for example amending the cause of tuition? -- amending the constitution? and sound like we are having technical issues there with ilya on the phone, but let me walk you through what is going on. we have eu leaders, this is the first time that high level eu
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leaders have really come into these negotiations. that is important because of course we reported there is a truce a couple of days ago, and six or seven hours later, another 50 people were dead. you need eu help in there, and you need russians. >> the question becomes what are you going to do about the money because russia has a $16 billion pledged to the ukraine if there is a management government change at the top. you see russia threatened to pull that back. what will the eu and other western countries due to plant the money? >> most interest like, and we have hot fumes coming on later to talk with the debt situation in the ukraine, but they have not floated their next round of below market interest rate bonds that they typically get from russia in the form -- as a form of help there. ilya, do we have you on the phone? have we resolved the technical issues? abouto us first of all
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what these concessions mean. what will they made to be protesters in the street? feelings, i can say, that professors have about these concessions because all my friends, they all say it is not enough. they want yanukovych's immediate resignation. the situation is quite tense. i am in the street, and i can -- which they found near the presidential administration. and they say there are grenades. a box of grenades and they are carrying them now into the camp to check whether these grenades are stun grenades or -- >> ilya, if you are talking about grenades on the ground in
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some capacity, it sound like the violence that we have seen is not over yet. >> no, it is not over yet. it is over today. there were no huge clashes today. there were apparently some classes during the night -- clashes during the night because there were groups of people that were brought from parts of the who are,y government as we hear reports, terrorizing the streets, so protesters also guysgroups attacking those , and -- protesters do not like this, then why did the opposition sign the agreement? [inaudible] the guy who talked just before
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his group found the grenade, the guy who is from the far right group, which is called right for one ofs group is the most active paramilitary groups here, what his feelings are. he is from viktor, western ukraine. he has been in business, he has a small business selling goods , and for months now, he is here. he was worried about his jacket, and he is wearing a helmet. he said that at the moment we are moving in the right direction. i think that there is some sort of breakthrough, but there is a move forward. we do not want -- >> it looks like we have lost ilya there. kiev,rkhipov there in obviously reporting literally from the scene where protesters had just gathered up, for example, a box of grenades.
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we hope that he is a safe and we will continue to try contacting him. obviously it is still tense. there still is the possibility of violence. >> just as we get headlines here that there is a truce and a deal , it is not mean on the ground that the protesters feel the same way. >> exactly. we will talk to hans later about the financial situation because it is key to this as well. and speaking of financial situations, remember when the government bailed out fannie and freddie? now they are writing the government a big check because they are making dozens of billions of dollars in profits. stick with us for that. ♪
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>> fannie mae is on an incredible role, and u.s. taxpayers are the big winners. the housing finance giant bailed out by the government in 2008 announced it will write a 7.2 billion dollar check to the treasury department after reporting its eighth straight quarterly huge profits. chief washington correspondent
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peter cook is with us. and it looks like, and i am just looking at the numbers here, the very cursory numbers, they are making a killing in giving it all back. isn't that great? >> they're making a lot of money. $84 billion in 2013. >> $84 billion. with that into perspective. that is more than goldman sachs, morgan stanley, and jpmorgan's annual profits all put together. >> and the profit all goes to treasury? >> almost all the goes to treasury, yes. it under the terms of agreement, after it went to conservatorship, we have lawsuits pending, but the bottom line is, the total bailout to fannie mae was about $116 billion, and now the dividend amount on paper, not a direct payment back, but on paper, taxpayers are ahead, 121 $.1 billion. the same is basically true for freddie mac as well. >> gse's are, like, minting
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money for the government -- >> are they, though? is there a catch? >> this is real cash, and this is money that again not a lot of people had anticipated a couple of years ago that these companies would be a burden for taxpayers, that ultimately there would be a loss. that has obviously changed course and it is adding to the policy debate what to do with them because democrats and republicans both say we have got to get rid of fannie mae and freddie mac, but the fact that they are spending obvious money to taxpayers make that decision much harder. quite what is the best >> with the political will to want to change it when it is cut $121 billion from fannie? the ukrainian protester looking at the truth -- >> let's not compare it -- >> i have to be skeptical. if they can make money like that, there is no reason to stop -- >> well, that is the view that people will privately express on capitol hill. why mess with this right now? isdy says it is not -- it
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going to continue to be profitable for the for siebel future, maybe not at these levels. , butillion is a record this is affecting the debate over what is going to happen to the gse's. in the fall, there was a sense of momentum. bob corker, mark warner, and the senate of bipartisan bills close them down and replaced them, reduce the government roles here, and that has been scaled back. the fight over how to handle this, how quickly to cut the government court, how much to -- >> congress has what, six months, and then they go to summer break for god knows how long and in a comeback and have midterm elections, so if anything is going to get done in the next few months -- >> in terms of big-ticket items, i think it is a longshot to get done this year, but it remains in the field of play because there is bipartisan agreement that something has to change. we cannot have the institutions in the same form that they were in leading into the financial crisis will stop it has to be different. but agreeing on exactly what they look like going forward is going to be tough. there is an agreement among
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democrats, there is an agreement among republicans as well, and that is where the split is. it is almost interparty before you can even talk about merging. >> oh, good, more distrust. >> meantime, taxpayers will continue to make money off this and not everyone expected that. >> all right, peter cook -- >> i am getting more money in my paycheck or something? ityou don't even knoneed with your 3.5% -- >> the fate of herbalife may not lie in the company's latest earnings report in the halls of capitol hill. we are talking about washington. that is where they are there to tell congressional staffers at the company is not a pyramid schema or garlands of what bill ackman wants into -- wants them to believe. correspondent megan hughes is live. >> executives are going to be meeting with staffers. it is not any midi or member,
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but staffers in general. think about it as an info session. we know from an herbalife spokesperson that they will be meeting from at least two executives from herbalife, making this pitch. we will be hearing from john b simone, the cfo, also ibi fleming. they will also be hearing from association,lling this meeting getting underway in the next half an hour. also important to point out, guys, this is not the first time that herbalife executives have sat down with staffers here on capitol hill. they actually met with senator markey's office back at the end of january. so they are certainly starting to make the rounds. >> they had a lot of trouble, making, with senator markey, right? of the he has been one more outspoken lawmakers, and they're probably hoping he will not snowball. he sent a letter to the sec and the sec asking for an investigation. he asked herbalife to explain
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the business model, sending a letter to the ceo, michael johnson. johnson we know responded just this week with his own letter, but probably laying out a very similar pitch to what the executives are going to be making today. essentially saying look, these jobs are just like amway or avon in terms of the business model, and he also made a case that this is all about jobs. i want to read you a little bit of this letter, we have a copy -- herbalife is proud to be a good corporate citizen, employee 7400 people apart from more than 500,000 individuals in the united states who are members including approximately 6750 -- and one contract manufacturer employing 94 individuals in massachusetts. so ready between the lines here, they are certainly speaking the language you're on capitol hill, speaking about how this is helping constituents, how this is bringing jobs, manufacturing to the u.s. he also points out in his letter that they have started a manufacturing company or a
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manufacturing outlet in north carolina, so that is all going to be part of the pitch today. >> interesting. jobs, keeping manufacturing here, he why so much, megan hughes in washington. -- thank you so much, megan hughes. >> the high cost of free text messaging. that is coming up next on analysts "market makers." ♪
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>> and we are approaching 26 past the hour so it is time for bloomberg's "on the markets." disappointing home sale numbers coming in down about 5%. -- s&p awn throw away stone throw away from its record high. nasdaq is the bigger winner of
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the day, up over .1%. >> it is a calm friday. >> we have been getting some not so great data in the u.s., not really rattling traders. snp is above all of its moving. -- s&p is up all of its moving. >> under armour extending for eight more years. following criticism that the -- sloweddown a down athletes at the olympic games. >> eight more years? >> more commitment than i will ever make. coming, supermodel petra nemcova tells us what she does when she is not posing for the camera. >> your favorite piece of this whole day. >> this is "market makers," on bloomberg television, streaming on your phone, your tablet, and at, and now we are also on apple tv. are awayrget if you from the tv, you can see us
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anywhere. >> apple tv, too. i love apple tv. ♪
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>> live from bloomberg headquarters in new york, this is "market makers," with erik schatzker and stephanie ruhle. appleebook's $19 billion -- acquisition of whatsapp has left many people scratching their heads and while analysts try to figure out what it is phone carriers know the deal is going to cost them. let's bring in the markets reporter olivia sterns. let's talk about what kind of threat this is for the big phone carriers in terms of dollars. >> it is a huge threats. it is going to siphon $33 billion worth of estimated revenue. that is for last year.
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that is for 2013. that is a huge amount of money. it is not just companies like whatsapp, though, it is all these free messaging sites, anything that lets you send texts over data. you would send fewer testament -- text messages abroad -- >> they cost, like, five dollars a piece, but it they would not be texting back and forth so much. but with whatsapp, you can text 100 times a day for free. this is not a loss for the phone operators, it is a loss to the whole economy because that money is just vanished, gone. >> it is probably good in whatsapp and their $90 billion valuation, so it is -- >> consumers, too. >> this is not a new trend. what they have started doing is rolling out these flat rate, unlimited texting plan. for example, i had an at&t plan
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that was $10 a month, and that is some interactional -- international texting. so i will take state friend in -- and so i will text a friend in europe post-up >> you have blackberry messenger? >> yeah. if you think of how quickly whatsapp took away customers from bbm, it is something that could leapfrog over whatsapp. >> i used facebook messenger for a long time and i thought it looked for -- worked fine. >> whatsapp is smoother. >> the interesting thing is there will never be any advertising on whatsapp, and they only charge $.99. although i don't member ever paying for it. >> evaluation means these are worth $42 billion to facebook, so we will see how they want to monetize it. mark zuckerberg says he wants the company to go on its own, he wants to row the user base.
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it is not to interfere and focus on monetizing, he just wants to grow the user. the biggest promise not to u.s. carriers, it is to the international carriers and what it does to texting people abroad. for example, in mexico, 90% of all instant messages in mexico are sent on whatsapp. that is enormous. think about how much money that is costing carlos slim. >> i have to remember to call at&t and text -- and cancel my texting plan. olivia, thank you for that. olivia sterns on the incredible price and valuation of whatsapp. now, a company that has cornered its market, the one that oil and gas companies have to go to when it comes to fracking coming up next on "market makers." ♪
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>> it is one of the biggest chemical companies you have never heard of. companies --the the chemicals made for hydraulic fracturing. water, sand, chemicals into the rock and you get oil will stop it has totally revolutionized the industry. me.s like christmas for i get to talk by chemicals and oil on a friday. >> wow. exciting day. >> can you describe what your business is? >> univar is a chemical distributor. we provide chemicals for a host of inner gas industries. our largest focus area is oil and gas and the largest part of is oil and gas business
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fracking. >> a lot of people get multiple adrian the mixes himself, but you do it for them. about 15al frack has chemicals that go together with the water in sand to get onto down into the ground with high pressures to make sure that the frack goes well. what we are able to do is make sure you have the right chemicals for that specific frack, and what we do is we provide all those chemicals together, 24 by 7,365 days a companyenever the oil wants them on-site. it signifies the logistics, they get what they want when they want it where they want it. >> you go to north dakota, i mean, it really has changed the entire landscape. the u.s. i think of fracking, i think people who can like there water on fire and kids dying. is it not a horrible way to pollute the environment?
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>> natural gas drilling is very safe, and fracking is equally safe to his store coal, conventional drilling. the drill goes through the water table, but then it goes more than a mile down into the ground and the fracking occurs very deep. >> why can virginians and pennsylvanians burn their water? did they not do it right, or did they just have flammable water to begin with yo? >> companies that know how to do it right have kept it going for many years. >> that said though, you have had the explosive the fertilizer when in texas, so the whole chemical industry coming under more intense regulatory issues, are you worried about that? enormous focus on safety. we have a very strong safety culture that we are constantly
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learning how to be safer. our goal is zero injuries, zero releases of any material. >> and you are worried about washington, though? >> we want to work with the government. we want the government to have smart regulations that enable the chemical industry -- >> what with more regulations due to your business? >> i think smart regulations make sense for everybody. you want everybody to operate at a certain standard that avoids incidents that you hear about in the papers. >> smart regulation, right? >> you don't typically think about things coming out of washington as terribly intelligent, do you? >> the way we look at it is we have to operate as safe as any chemical company in the world and what we do is we focus not on the regulations but on doing everything that we do safely. so that when we get chemical from a supplier, and we blended or whatever we do with it, store it, package it, transport it,
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every step of the way is done completely safely and avoiding with backups to make sure there are no incidents. >> let me ask a question that alix sort of asked nab earlier today -- why wouldn't an exxon want to come along and snap you up? why one at one of the big, integrated oil companies just want to take you for their very own? >> because you take a situation like fracking, but there are a lot of different industries that we play them, coatings, food ingredients, where there is a whole bunch of different chemicals that get use from different suppliers. some of them are blended together, and you need to pull that together and get it logistically very -- >> so fracking chemicals is not your only business, you have others, so it would be a little too much for them. >> but also we provided whole slew of solutions. there are other chemical companies that make important elements of fracking. we bring all that together into a solution set for fracking, for
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coatings, for coating manufacturers, for food manufacturers. if you look at a label of a protein bar, there will be 25 ingredients. we can put all of the gradients together and we can talk to the food company about what are the best ingredients for what you are trying to do. taste, color, the feel, the solution set. >> i guess my next question is really -- where are you diversify into next? the thing about shale is that u.s. is definitely the leader but there are a lot of countries that have shale. ukraine, russia, china does. >> last year we made a significant acquisition in shale orcause the masons b developed in south and west texas do not stop at the texas border. they go into mexico. president yenieto recently opened up the oil industry in mexico. but we keep improving our capability to offer a solution
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set to our customers in north america, which is going to continue to grow very rapidly and expanding our capabilities in north america but getting ready to follow our customers around the world. >> how do you fund that expansion? >> investment. we put more people, more facilities in place. we have started to do that in the middle east, and parts of latin america, asia pacific -- >> what is your exit strategy? aboutlet our owners worry that. my management team and i, and i believe we've got the strongest management team possible in this industry. i think we have got an outstanding leadership team. we focus on having a clear outstanding inng areas that we think are the highest growth in performing, and we will let our owners decide what they do. >> hoping that the u.s. does not run out of shale or the easy shale. thank you so much, erik. it was a pleasure to have your, , ceo of univar. >> ok, now the "sports
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illustrated" cover girl with a passion. petra nemcova, we will listen to what she says. >> it is not friday or chemicals -- >> it is not that exciting, but we will still show you this segment with a "sports illustrated" swimsuit model will stop stay with us. ♪
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>> she is one of the most beautiful women in the world. petra nemcova is a former "sports illustrated" swimsuit issue cover girl, but since surviving the indian ocean synonymy in 2004, she has founded the happy hearts fund, rebuild founded to help schools. stephanie ruhle spoke to her this week about the organization and a new ownership and about specialsuit issue's fill-in that's 50th anniversary. got 50rts illustrated" models in one room in a secret
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photo shoot. it was incredible to meet for the first time the first cover girl, christie brinkley, kathy ireland, kate upton. most of these women became icons and entertainment, business, became a powerhouse because "sports illustrated" gave them the platform to become those icons. >> once you reach that status, you are in the "sports illustrated" swimsuit edition seven times. what does that do for your career? >> it was a really incredible launchpad. actually, you become a multidimensional. you are sort of two-dimensional as a model, but with "sports illustrated," it gets you don't mention because people start to know about who you are as a human being. -- it gives you another dimension because people start to know who you are at the human being. it takes her story, and there is a whole new world, many doors and windows open. amazing giftlly an because through that, we can accomplish whatever is your
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passion, your dream, in my dream is to do a lot of work in philanthropy, and i will be doing that. >> when "sports illustrated" came to you for this issue and they said we wanted to participate, you have a business proposition for them. yes, let's do something, not a one-time thing, let's do a long-term partnership together and build many schools going forward. of course, there had to be willingness from "sports thestrated" to do that, and editor, she was like i want to do something meaningful, i want to do it, and this year, the 50 tniversary of the sunami was really perfect timing. it was a business proposition to take, to make a smart partnership. and "sports illustrated," i must say, they have been the first ones to support, while i was still in the hospital -- --after the tsunami
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>> yes. i was in the czech republic. they had the launch of the new issue, and i was in hospital lying down, and they called me up, i spoke to someone on the speakerphone, and they were raising funds to support victims of the 2004 tsunami. they were the first organization ever to support, so it is amazing to continue this relationship and now making its first official order ship for "si." we are so honored. we have so many goals. it will be launched a partnership and many, many schools. happy hearts, and through their partnership, it is not just about awareness, it is about taking action. anyone can enter a contest, and you can go to the website, you it is an a raffle, and offer of five dollars against an opportunity to be on the next "sports illustrated" photo
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shoot, plus one, all taken care of, all troubles, and it has never been open to the public. it is really amazing that "sports illustrated'is giving out that to help build schools for the happy hearts fund. >> petra, you are a beautiful woman inside and out, but many people look at the "sports illustrated" issue and they criticize it. they can get object of five women, it sends the wrong message. how do you feel about that criticism? >> every woman is born with a curse, and i think we have to embrace it. actually, being in "sports illustrated," even being in an issue, not even the cover, makes you more powerful. it makes you feel empowered. and when you are on the cover, it is again a whole other level. i think it does the opposite because if you look at kathy ireland, who became an incredible businesswoman, heidi klum, incredible businesswoman in entertainment, there are smart cookies, all of them are smart.
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another is a studying political science. it is really incredible. and to reach that level, you need to be a smart businesswoman. but what "sports illustrated" does -- it actually empowers you. it gives you the tools to feel empowered, and they uplift you. "sports illustrated" uplift you. there is no question about it. it does the opposite of what people think. xd you think the beauty ideal has gone too far. one model says photoshop has become too much. she pointed to magazine editors saying they are pushing women to beauty,erms of perfection, how they are re- molding things. the need for lasix surgery. do you agree with any of that? -- the need for plastic surgery. do you agree with that? >> 100%. anyone who is tweeting that image of what beauty is -- there is no such thing as perfection. the way i see it, the perfection
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is imperfections, so whatever is unique about you, it makes you beautiful and perfect, one of a kind. i think those who are sort of tweaking with that message have to take the responsibility because you have 11-year-old girl and boys being anorexic because they want to be like the models who are altered through photoshop. it is really -- i think people do not understand sometimes what areeffects of their actions beyond fashion. we have to celebrate all types of bodies in all types of spectrums, no matter what it is. in "sports illustrated," you will see girls from all over the world into in different shapes, and they are beautiful. the interesting thing you may not know, when "sports illustrated" meets the girls who possibly will be in the magazine, they never tell them to put a bathing suit on.
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they just sit down with them like we are sitting today, and they just talk together, the editor, she just talks to the girls who are coming to casting biggie she is going to put a bathing suit on. none of that. they talk. if the girl has a great possibility cut -- personality, and she has a sparkle and there is something special about her, that is when she can be part of the magazine. it is not about the body. >> i tell you what, i would never ask her to but a bathing suit on, either. [laughter] i wanted ask her to wear anything at all. [laughter] >> enough of that. >> petra nemcova. >> personality, didn't you hear the whole point? >> i just heard they do not ask you put a swimsuit on, which is what i thought was the worst part of the swimsuit issue. >> they want to hear your personality and all that. >> the cover this year i think is the best "sports illustrated" swimsuit issue cover i have ever seen. >> why is that? seenguess -- have you ever
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the "seinfeld" when cramer is driving around with the other guy's car? >> they are all half naked women with bikinis on. how is it different? >> i guess i like the view from this photograph. there you go. >> and she is doing some pretty amazing stuff, sort of melding her two careers. >> laudable. that is so great. >> we are approaching, save me from this conversation, we are approaching 56 past the hour -- >> the clock will save you. >> almost to "on the markets." almost .3%,bee, despite it of home sales down 5% in january, 520 way from a record high on s&p on a slicker -- on a relatively low news day. >> considering how poorly this year started out and considering the bad weather, i think it is amazing that we have gotten this -- inack in martin
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markets. >> february is definitely proving january wrong. >> the interesting thing is it is global. we are looking at global -- u.s. markets, but global markets, emerging markets have been better. forecast due its to its demand for tax preparation software. wow. we are getting close. tax season approaches. >> route one, that stock has fallen the most in a year after it forecast at profits that fell. they pay $20 million for two acquisitions. also marketing, they have to shell out a lot to get people coming back. i was on group on for a while. i did it for six month and they lost interest altogether. you have got to keep reaching out, keep marketing, and that eats into your profits. priced right. there are also does >> right. there are also other
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competitors. stay with us. ♪ >> live from bloomberg
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headquarters in new york, this is market makers. >> out of gas. the market for cars and trucks might be ready for a stall. yft have-uber and l run down car safety. that you have rings back
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then. had watches. now you can buy it. the biggest at catalog of sports memorabilia of the year. 12 market makers i am matt miller. i am alix steel. sales.ooking at home they did take a hit last month. it was the lowest level in more than a year. the demand was slowed by bad weather. price of an existing home rose 11% over a year ago. the company involved in one of the biggest leveraged buyout ever is getting ready to buy -- file for bankruptcy. is arranging loans as a struggles with $40 billion in debt. the bank received filing would result in energy futures splitting into two subsidiaries. under armour is surviving the
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controversy over its much-maligned speedskating unit. agreementling its with the speedskating team. it was criticized after they failed to win medals in sochi. a very good question. there is a deal to end the months long standoff in the ukraine. antesters have accepted offer from the president to hold early license and to revise the constitution. ukrainian bonds are jumping on the news. centers and pores had just cut their credit rating to triple c. he has bun buying it. bottom protect this investment. it is like a hero trade. taking isy, bottom
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usually the exception. usually we try to do a scale and. then we see problems like they had this week, wednesday things were very choppy, we thought we should get involved. >> what is your time. ? >> you have to look at the downside. the debt to gdp ratio is not the problem. if you get this kind of political strife, you get stopping payments. then you have to start looking .t restructuring scenarios are it was much less than the upside of things got resolved. without the chance of a civil war were pretty low. it is a matter of scaling and hoping that things don't get to bet on the ground there. at bonds thating
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mature. plain withho than five points of upside. there is five percent return between now and june. across the curve, everything has jumped. it looks like things are stabilizing. we are not chasing it right now. thee is some chance president could be gaming this. he does not want to leave power. people who have supported him probably won't this go round. negotiations some with russia in the backup. beenssia's power has diminished a little that in the face of the european union in this to go she asian. -- this negotiation. european union and the u.s. plays this, they need
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to devise a support package to the ukraine going forward. >> they need to work well with russia. you don't want eu again over the western half of the country. that is regionally, but the culture. you know what food and taking over the eastern half. gets its natural gas from russia. there has to be some relationship between the three regions. >> it is like the united states in syria. how do you engage in the ukraine? ahead, i will rip up the script here. there has been a lot of talk on social media about what is going on in venezuela. relatively little talk in the news about what is going on in venezuela. does that country look like
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in relation to what we are seeing in the ukraine. for longer.en messy you have a lot more intellectual capital flight out of the country. these are countries that should function very well economically. they have been stuck with an competent government. >> they have very high inflation. >> there has been violence. >> the opposition leader submitted to the police after some results there. how are you investing in venezuela? >> we have gone to pretty much full weight in the case of ukraine and getting full weight in venezuela as well. venezuela should not default unless they mismanage it. this is only a symptom of economic mismanagement. in the situation you have countries that should function very well
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economically. you have a plutocracy in one place and some bizarre new tatian of socialism and the other. >> what hannah volatility are you expecting in the debt of all of these countries? it is probably pretty volatile. >> the downgrade was background noise. that, you're not dealing with a group of investors. there is going to be volatility. there has been volatility in venezuela. the difference is venezuela has been a big holding for people who are emerging market trackers. the ukraine has won a large institutional holder. most of the guys involved know what they are doing. the yields in venezuela are higher than you
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can find in ukraine. there is opportunity for volatility, but that is the entry point. thank you so much for joining us. i have a feeling you're going to be in high demand here on bloomberg. >> do you like uber? >> i drive a car. >> they reinvented the middleman. where going to see if they put cars out of business. >> it is friday. it is time to play the yearbook game. take a look at this man. lous altosd from high school in california in 1962. that is all our producers are telling us. tweet your guesses to me. dude? this
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any guesses? >> i give up. >> he worked really hard on that.
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>> it is time now for bloomberg west top tech and media headlines. costing carriers are billions of dollars. when apple will be part of facebook after mark zuckerberg paid $19 billion for it. by study estimates that 2016, messages will reduce texting fees by $54 billion. that includes i messaging. shares of groupon are down as much as 70%. there profits missed estimates. it is trying to change service
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discountsthousands of instead of just daily deals from ascites to be popular. steve jobs would get his own postage stamp next year. that is according to a post office document obtained by the washington post. the design is still being worked out. others said to get their own , i thinkelvis presley he already has multiple stamps, and it will chamberlain. l this is cooler. -- l this is cooler. upstart uber is trying to change the way we drive. it has to break to the cab industry. we will look at the invasion of
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the taxi snatchers. he joins us from san francisco with more. i read the piece and it was very good. what is most surprising thing you learned? >> it may have been just the sheer pace of growth. 300 millionsed dollars. it is growing everywhere. hundredll probably be a cities by spring. here in san francisco thomas we are at the nexus of these things. uber and sidecar. did it end up that well? it is growing with more discipline. >>uber is a product for the wealthy in new york. it is for people walking out of
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balls and dispense of restaurants. the average dude on the street uber account. town car originally a service. the strategy was always to go down market. uber has rolled a different services. was in san francisco, it disrupted by sidecar and lyft. they lowered prices. very much like amazon, the idea is to get a lot of supply out there and then use it to lower prices. it can be more expensive than a especially in surge pricing situations were they jack up the rates. rates.n is to drive down in a lot of cities, they are
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less expensive than a traditional cab. solution to aet typical problem is controversial. i don't understand what the issue is. it makes perfect sense. look at the reasons why the taxi industry was regulated in the first place. there were good reasons. there were issues of safety and making sure drivers were insured and licensed. some of the new players were exploit that. the critics are going to say that we have seen the results. there been some tragic accidents. and demand supply problem has been smoothed out. how do you deal with that otherwise? a taxi when to find you need one. it just makes perfect sense. don't you think it's really up? >> i'm not going to pay $400 for
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a taxi. i am curious about the regulation. you started to bring up the controversy of insurance and safety. expecting washington to pile on regulation? , ait is hand-to-hand combat city by city and state by state. they have good lobbyists. yfty are fighting alongside l and sidecar. in california they have been approved. in boston and miami you cannot buy -- use it. we have the same question that you guys are bringing up. we went out and that these services and talked to the driver. by large, they said surge pricing does get them on the road. it may be facing the supply and demand imbalance. >> here in new york, they have
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to have a maximum today -- per day. unit that pretty fast. there is a low barrier to this kind of entry. >> to have a long-term land of being a logistic network and liver in food and other services. focused at least for the short-term term on expanding the service and try to get the fares down. i think all of these companies have a long-term vision of doing something different. for now, the story is expansion and trying to get the driver within the network. much, bradu so stone. i encourage everybody to read his article. >> brad stone has 60,000 followers on twitter. i think it is because of the covers for businessweek. president obama's new budget has
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-- is interesting for what it does not include. that is next on market makers.
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>> remember the good old days when there was the thought of a grand bargain in washington? president obama's budget blueprint will not include any entitlement reform. this is a key republican demand. peter cook is with us in new york. what is the message here? >> the message is it is an election year and it is time to strip democrats and get their support for a budget would print very and it is not going anywhere in congress anyway, so why not make one.
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make it more appealing to democrats than it does to republicans. it reflects the budget environment. we have a deal that sets spending levels. there's not much the president to do anyway at the margins. just a partyly internal propaganda. >> it is always the ideal version of the way to spend money. the congress rips it up. it is a blueprint for setting the agenda. is --e is doing this time last time he used and all of branch and included cost of living and just months which would've saved money. it was controversial with democrats. he is taken that out. do to midtermhis elections? togives democrats something
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campaign about. it gives them something to do something about. they are preserving social security. there should've been tax increases to generate that revenue. the president is saying that he is going to join the democrats team on this issue. the white house says this is still on the table. if the republicans offer revenue increases, so far they have not done that. >> i look at this proposal, spending on manufacturing hubs. government programs for developing new skills. early childhood education. that puts the republicans in a position to say they don't like those things. >> it is of the president was to spend. it is how he plans to pay for it. with revenue it up increases. corporateo tighten
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tax rules for overseas businesses. they want to crackdown on american businesses doing business overseas and how they bring that in, back and keep taxable income offshore. he is going to need congressional approval to do it. he would get that. aboutinteresting to think how many other countries tax businesses that do business overseas. >> it does not use the territorial approach that others do. does them part of the debate. -- that has been part of the debate. there has been partisan agreement that the corporate test code needs to be overhauled. the individual tax goodies to be overhauled. watch dave camp, he is going to put forward his idea for the tax cut -- code overhaul should look like.
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to havehis last chance a real legislative signature item. there'll be a lot of interest in what he puts forward. is there another agreement for one sit down. >> how they fix it is where they can't agree. >> a lot of people in the administration think this is an opportunity for the president to have a lasting legacy by changing the tax code. beentitlement reform must high on democrats wish list as well. >> in a midterm election year, forget it. you don't win an election by entitlement form. >> thank you so much for joining us, peter cook. it is always interesting to talk about what is not going on in washington. >> he was over-the-top hedge fund managers into the thousand
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13 -- 2013. world,ywhere around the it is time to play the yearbook game. who is this guy?
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>> live from bloomberg headquarters in new york, this is a market makers with erik schatzker and stephanie ruhle. to the mostlking successful hedge fund managers. the magazine is that with its list of the most successful hedge fund managers. himhanie said down with earlier this week. take a listen. >> i thought 13 was our best year. in both the terms not our highest performing. itt made it satisfying was
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was a year of trade as opposed to strategy. i don't think we really garnered -- there were five or six restructurings. if they contributed. we did well on structured finance. we were very trade specific as well. finding you opportunities in 2014? >> i'm very optimistic. half iswell more than in things we don't own yet. 2014, we willd see the benefit to us of the fundsearance of the hedge
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losing their mojo. so -- wheneverre there are surprises, they don't get repriced as quickly as they used to. are priced with an implicit rate of return. there are things we are not expecting or anybody is expecting. we will create opportunities and we would like to be able to exploit them. >> you don't own the things you think will run this year. why? >> it's a hypothetical. we profited from several restructurings last year. hypothetical company with $500 million equity cap and $700 million in debt.
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effectively 400 million in debt for 400 million of equity, that is 900 million of equity. you take the debt from 10% to five percent. occurs, the event is the restructuring agreement or the process. the repricing would not happen overnight. as you see something like that transpiring, we have a pretty good chance of buying the debt at nine percent. are there specific sectors that you like? >> we are general. of -- there will be
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opportunities. dominated space is not it is cheapdlines. relative to the rest of the interest rate. there are some interesting securities in puerto rico. >> you say you're a generalist, what do you think of the u.s. economy? >> it is probably ok. >> doesn't matter what is truly happening in the economy? or is it more important what the fed does in terms of quantitative easing? >> it matters to us that happens in the securities market. action.ted by that who knows how much and when. you think this will a year of hedge fund consolidation? well, i think what we have
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seen in the past is not the effect of them closing but of hedge funds losing their mojo. they are sticking to more beaten paths. it i suspect that it will continue. see moreot expect to than the average number of hedge funds go out of business. that is a great interview. >> doing a piece of the sultan of swat? there is a sports memorabilia auction. you can get a lot of other supercool things. we will show you some of them next on market makers. ♪
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>> there is able interesting story coming from washington. the fed has released its meeting transcripts. mike mckee has been coming through these papers all out of the newsroom. it must be fascinating to read through this recent history. >> at tells you what they were thinking at the time. they release their transcript with a five-year lag. our first peek into the boardroom when the crisis was unfolding. there were six emergency meetings. begun tong crisis had implode in 2000 and seven. bitt yellen looked a little precious suggesting that the economy was just about to fall over. downturnere housing
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but the economy beyond recession. janet yellen was one of the first to suggest the economy is rolling over. then we went through a series of crises including bear stearns and lehman brothers. the very next day, fed officials gathered to discuss what was going on. the boston fed seem to sum it up best. we had no choice because of the legal constraints. we took a calculated bet. it would have a run on the housing -- money market funds or if the non-governmental party repo market shuts down, that that may not look nearly so good. the fed take a chance and lost that bet with the economy rolling over. they went to the toolbox. , theye tools they used
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were cutting rates over and over again. they had an emergency phone call meeting on october 7. what they were doing wasn't having an effect. it was a dangerous time for the market. struckested he would was by the feeble market reaction by the substantial escalations that had been added. tot forced ben bernanke capitol hill where they scared the heck out of members of congress and got the tarp proposal. that was forced on all the banks. that put a floor under the crisis. it was a fascinating year and the transcripts are fastening. they may read through it with horror, but it's interesting to read through. >> berry cool stuff as far as
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history is concerned. -- very cool stuff as far as history is concerned. >> it does point at the intense situation they were in. no one really knew what was going on. boxingave mohamed ali's gloves. we're going to show them to you in just a little bit. >> it is time to play the yearbook game. take a look at this man. he is an investor who graduated from high school in 1962. i have no idea. i am terrible at this game. me., tweet your guesses to >> i can give you a hint. he looks better with a mustache. sonny bono.oks like
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>> check at heritage auctions annual platinum night sports auction happening this weekend. one of the things up for sale is babe ruth's watch. director ofthe sports collectibles. he joins me now. i did not know this but they did not have rings for world series championships. awaye that, they gave watches. >> this is babe ruth's pocket watch. >> it came out of cincinnati. 23 was a big year for the yankees. it was the opening of yankee stadium. it was the first championship in the first of their dynasty. >> i'm not a sports person. explain me the money that is on the table. >> we have over $1 million of
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the table. overe current bidding is 500,000. i would not be surprised if it hits seven figures. >> does it run? >> it does not run it. it could be fixed. under 30 may not know who babe ruth is. does that affect the bidding? >> who doesn't know who babe ruth is? there is nobody in this country who doesn't know who babe ruth is. anybody over toddler age knows who babe ruth is. >> if i was 18 i now i don't think i would know who he is. >> he is one of the most well-known historical figures in the country. >> how to get younger people to get interested? it seems like the older wealthier people will be dying
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off. >> some people are buying these as an alternate investment. investments,t and but collectibles are starting to grow. it is a great conversation starter. >> to people pass it down throughout generations? >> a lot of people do with the family. they go to the auction with their son and his son may collect a certain athlete. they do it together. it is often not passed down. >> let's move on over here. spend,have $500,000 to you know who babe ruth is. i would be more edited in the gloves. for me, i love my molly. i love to watch boxing. he is doubtless the greatest boxer ever. i think most people would agree. you have his gloves.
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that would be amazing. how much will he go for? >> their estimated $500,000 plus. from when he won his first heavyweight championship when he beat sonny liston. >> what is been your biggest sale so far? sold a lour, we gehrig's jersey for $717,000. just below that was the miracle on ice jersey. that's over $650,000. >> was the strangest thing? last year, we sold kurt schilling's bloody sock. >> that is horrible. >> why would you sell it?
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>> it sold for $92,000. memorabilia gol for more than other sports memorabilia? wall street guys love baseball. because of the numbers thing in, they are all baseball fanatics. >> baseball is 75% of the overall market. the 80's are 50% of that. that is a kind of market share. they are the biggest sports dynasty in the united states. the sales you expect to be over the next two years? how is the price changing? >> it is growing at a rapid pace. we are growing at 25% a year. we are the largest in the world. we did over $30 million in sales last year. we are being exposed to a better
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audience. -- more investors are into collectibles. collectibles but rare coins and comic books. there are things you can be passionate about and put on your wall. it is a small part of the portfolio of their investment. >> people who don't trust the equitiesd don't trust they're or the dollar, looking for a place to put their money. >> what is the rate of appreciation? >> nothing surefire. $50,000 on aending jersey in the late 1990's and people work on them crazy. those jerseys are selling for 700,000. the appreciation has been quick. >> i wanted with the try and put
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the gloves on. canada the mod? >> if you want to -- can i put them on? >> show the inside. >> we'll be right back after matt tries on these gloves.
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>> we are playing the yearbook
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game. that was his high school graduation picture. i am the only person who did not know who this is. it is bill gross. he runs the biggest bond fund in the world. it is not been wearing a mustache of late. here is one of the winners. a lot of people tweeted in the answer. he is the emperor of our time. i am not very good at them. i got my answer from brock johnson. >> i needed extra help. >> we appreciate a lot of people helping us out. bloombergst time for on the market. bloomberg television is on the markets. olivia sterns has more for you. >> i know it is your favorite
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time of the day. we are jumping into derivatives with options insight. we had a near record close with 1848. there is a lot of action. is the senior market analyst. why all the bets on the benchmark? things are in justin. people are still optimistic. ministry percent above. with a buy to open, that is people adding onto new positions. what is happening in the vix, it is not going down. yet again on tuesday. there was a four percent loss yesterday and a four-person loss today. the market has gone up to the highs. big action in thevix yesterday.
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people are still looking for some upside potential in that volatility measure. >> you said you were perpetually a bowl. the market is going to go up until it doesn't. i'm not smart enough to pick the term. earnings growth continues. it is all about earnings. people worry about what the event could be. i am in the trenton market business. that is where the markets are going. we have to use those as opportunities and be selective. i am very positive. >> earnings do keep growing. we have seen that trend over the past two years. we have seen groupon shares plunge. first quarter profits were below analysts estimates. to transformg
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themselves into a discount site. >> eight is a very important mid-level point. i want to mention this. some unloaded upon 10,000 of the posts for february. they bought those. that paid off. it also saw a lot of action simmering nine. best of them from $.20 to $.60. we saw people trade in those only thousand contracts. >> you're watching walmart. they reported earnings. economic conditions could hurt growth going forward. the stock fell. their forecast is disappointing because the government is cutting benefits. what is your take? >> walmart is on sale.
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you can lean on it. 72 is the year support. below that, 70 is a crucial support level. from a risk reward standpoint, i want to be a buyer here. those are going for about nine. in a breakeven at $.75 away. >> they're going to leave it there. we're on the markets again in 30 minutes. lunch money is up next. ♪
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>> modem to "lunch money." . he will tie together the best stories. i am adam johnson. it's got to be the suit. u.s. speed skating gives under armour something to cheer about. top model citizen, there's more than meets the eye. we will meet the real-life lady of downton abbey. we will kick it off. it is a


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